The Purpose of a Business is to Make MONEY!
And to take it one step further – Not Just Money, but PROFIT – Which is Money left after all expenses are paid.
As obvious as that statement may seem, I know after years of running a Bookkeeping and Tax Service Business, that many business owners keep making the same mistakes that prevent them from actually accomplishing that goal.
Here are Nine of the Most Common Mistakes that Prevent Entrepreneurs from “Making Money”:
o Underestimating all the costs involved in purchasing, (or producing) packaging and shipping a product.
o Overestimating the size of the market for a product or service
o Undercharging for their services
o Not leveraging their time
o Not classifying expenses properly to take advantage of tax codes
o Purchasing too much, not enough or the wrong kind of insurance
o Overpaying on bank fees and credit card fees
o No collection process in place for customers that have not paid
And the WORST mistake is:
o Not having Accurate, Up-to-Date Reports to provide the above information so corrections can be made.
Too many business owners try to keep their own records, (or have a spouse or friend help) and because they lack the knowledge and/or time to do it properly, they don’t have the information needed to evaluate and correct potential problems.
Sometimes there is enough money coming into the business to continue despite making many of these errors but correcting them could mean a much better payback for the owner.
More often what happens is that the owner gets frustrated and overwhelmed and either gives up the business or in desperation – calls for help.
Usually after the Bookkeeping is set up properly and brought current – the owner can see the whole picture and assess where and what changes to make.
Sometimes minor changes…
o Changing Banks or Credit Card Companies
o Increasing Prices or Having Pricing Levels
o Outsourcing a specific task
o Changing Advertising Tactics
…can have a big impact on profitability.
Sometimes the changes needed are so great the owner has to re-evaluate whether he/she wants to continue or change direction entirely.
As you can see, having Accurate Bookkeeping – providing the Business Owner with the necessary reports – for a clear financial picture is essential to growing a profitable business.